Six Tips to Recession-proof
Your Construction Business
The construction industry really
took it on the chin during the
Great Recession. The number of
construction firms fell by nearly 150,000
between 2007 and 2013 and over 2.3 million
jobs were lost due to layoffs, early retirement
and workers leaving for greener pastures.
Federal Reserve Chairman, Jerome
Powell, recently said we may already be in a
recession due to the impacts of the coronavirus
(COVID-19) pandemic.
Construction business owners should
start looking at ways to recession-proof
their construction business now. Even if
another recession doesn’t hit as hard as
the last one, building a resilient business
that can weather any hardship is always a
smart move.
Whether it’s a recession, a couple of
unprofitable projects, subcontractor
default or some other business-ending
catastrophe, here are some tips on how to
ensure your company’s continued success.
Have cash on hand
Squirreling away enough cash to get your
company through tough times is a good
idea. However, you don’t want to hinder
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your company’s growth by hoarding cash
rather than putting it to work. If work gets
scarce, you want to have enough reserves
to cover your operating expenses and overhead
for a few months to supplement any
shortfall.
Don’t rely on backlogs
During the last recession, many construction
firms saw backlogs of nine to 12
months slowly disappear as projects were
put on hold or canceled altogether because
no one could get financing. Now’s the time
to start strategizing how you’ll keep work
By Kendall Jones, ConstructConnect
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